LEEDS, England — Pension funds have become more active in the U.K. marketplace, shifting from one money manager for all the plan's assets to multiple specialist managers, as well as changing managers more frequently, according to the latest survey by Russell/Mellon CAPS, Leeds.
As a result, plan sponsors have become increasingly likely to make changes during the past years, leading to more turnover in managers hired by pension plans, said Daniel Hall, manager-publications and statistics.
Plan sponsors have been creating new allocations, closing existing portfolios and/or changing portfolio managers.
The number of pension funds that added, terminated or replaced managers rose to 29% in 2003, from 25% the previous year.
The number of pension funds that shifted to multiple managers from a single manager increased to 61%, up from 53%, added Mr. Hall.
In previous years, most plans had high U.K. equity allocations; but with international equities at an all-time high in the market, most funds are investing more in foreign stock. The percentage of international equities rose to 26.7% at the end of 2003, up from 25.1% the previous year and 22.8% in 1999. This has been the trend for 20 years, noted Mr. Hall.
The main reason for the change in asset allocations is the move away from the entire fund universe to scheme-specific benchmarks, as plans are trying to tie assets to their liabilities, he said.
Notably, there has been an increase in specialist mandates. In 1993, 79% of funds had balanced and multiasset portfolios, and 21% had specialist mandates. At the end of 2003, the split was 45% balanced and multiassets and 55% specialist, added Mr. Hall.